The problem
We are living through a housing crisis, long in the making by consecutive governments’ failure to take action. Temporary accommodation is where the crisis is most acute: where peoples’ lives fracture; children are failed throughout entire childhoods; and Local Authorities are at risk of bankruptcy. It is the proverbial canary in the coalmine.
While the Labour government has made the housing crisis a priority, the temporary accommodation crisis keeps escalating. The latest figures from the government show 132,410 households were in TA at the end of June 2025, up 7.6% from the same time last year. This includes 172,420 dependent children, up 7.5%.
Every time we write about this, the numbers of households, and children, stuck in this accommodation have gone up. There have never been this many.
The only number to have gone down is the use of B&Bs, in particular for households with children resident for more than 6 weeks. This is welcome news, but of course we don't know where they are instead.
Out of area placements, where a family or individual is placed outside of their local authority area, is now happening in nearly a third of all TA placements across the country, also an all time high. This can be devastating for the individuals and families involved, but it also has inadvertent consequences on a bigger scale. As local authorities are scrambling for affordable TA in cheaper areas, on a population scale, people with the fewest resources are shipped to areas of fewest opportunities.
It is a crisis hiding in plain sight. The good news is that something can be done.
What the Treasury can do
There will always be people who fall through the gaps and end up homeless. Some of the reasons are difficult to legislate around, but there are specific policy levers that can be applied to address the crisis in temporary accommodation, help individuals become productive citizens and alleviate the public purse.
Specifically we ask the Treasury to:
Unfreeze the Local Housing Allowance
Raise the Housing Benefit Subsidy Rates
Lift the Benefit Cap
Lift the two child benefit limit
These actions would have the dual effect of addressing the most egregious poverty (particularly child poverty) and making housing more affordable. Addressing housing affordability would address two substantial push-factors behind the ever increasing numbers ending up in TA; while simultaneously addressing a blockage in the system that keeps people stuck in TA, unable to move on, for far too long.
Further, this would help struggling local authorities on to a more stable financial footing. With the Housing Benefit subsidy frozen since 2011, the amount local authorities receive falls well short of what they pay out for TA. This shortfall, which local authorities must meet from their own resources, is often known as the ‘TA subsidy gap’. New research estimates this to be a £740 million shortfall across London, equivalent to £202 per household. While most stark in London, this is replicated across the country.
The cost of inaction
To find this money, LAs have to dig into other budgets, such as the Homelessness Prevention Grant that is meant for prevention. Other local authorities put up council tax, close libraries and leave potholed roads untended. In this way they push the burden onto ordinary citizens, who might reasonably wonder why local infrastructure crumbles when their council tax is increased.
The continuing acceleration in demand is difficult to plan for, and has costly unintended consequences that spill over into many other areas of local and national government. These in turn become more expensive too.
And for the individuals at the hard end of this crisis, there is ample evidence that it makes sense to stop homelessness before it happens. Once people are homeless, their productivity falls, both in the short, medium and long term, and health outcomes deteriorate. The lack of suitable move-on accommodation means that many are trapped in this situation for years, even decades.
Children in temporary accommodation are particularly affected. For the majority of children, the combination of the difficult mental and physical conditions, means many are unable to develop properly through play and physical activity, and struggle to keep up with school. Living in one room, or sharing beds with your siblings, makes it hard to get a good night's sleep and keep up with homework. The cumulative effect when this goes on for extended periods of time will have a long term effect on their ability to become healthy and productive members of society.
In summary, there is a strong moral and financial argument for action. Ahead of the Autumn Budget, we have written to the Treasury to outline our suggestions, as to what they can do, to help turn this crisis around.
